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Is Recent Legislation a Prediction of Statutory Dram Shop Liability?

There is no question; drunk drivers are a danger to everyone on the road – including themselves. Recognizing that, many states have enacted dram shop laws; laws that hold restaurants or bars that overserve patrons and then allow them to drive strictly liable for injuries to third parties. A majority of states require establishments serving alcohol to have insurance that provides coverage to third parties injured by an intoxicated patron. Effective July 1, 2017, South Carolina now requires a person licensed to sell alcoholic beverages for on-premises consumption to maintain liability insurance in an amount not less than one million dollars. Has South Carolina moved one-step closer to the adoption of a dram shop act?

While South Carolina has continually fallen short of adopting a formal dram shop act, the state legislature and the courts have steadily moved toward stricter liability for those who serve alcohol. Historically, our courts have allowed injured victims to pursue recovery through negligence actions arising from the violation of criminal statutes. S.C. Code Ann. §61-4-580(1) prohibits selling beer or wine to a person under the age of 21. In 2007, the South Carolina Supreme Court, finding no specific duty in the referenced statute, nonetheless found the statute supported its decision to extend common law and impose liability on adult social hosts who knowingly and intentionally serve alcohol to underage guests. Marcum v. Bowden

S.C. Code Ann. § 61-4-580(2) prohibits the sale of alcohol to an intoxicated person; it does not, however, include a requirement that the intoxicated person be visibly intoxicated. In 2010, The Court of Appeals, continuing to broaden the scope of liability, and facilitate the steps to establish it, interpreted the statute to mean a plaintiff must establish only that alcohol was served to one whom the server knew or should have known was intoxicated. Hartfield v. Getaway Lounge & Grill, Inc.

Those who hold licenses to sell alcoholic beverages, take note: consistent with what appears to be continuing efforts to expand protection for those allegedly suffering injury at the hands of a driver under the influence, South Carolina has now enacted legislation that requires bars and restaurants to maintain significant insurance coverage, thus assuring compensation to a victim upon a determination of liability. It is also moving one step closer to the adoption of a dram shop act, thereby imposing strict liability upon those who serve alcohol. This legislation is likely to encourage establishments to increase their efforts to avoid liability, perhaps by way of additional training and heightened awareness of a patron’s condition. Insurers should also beware – this legislation requires you to notify the Department of Revenue if or when such required coverage lapses or terminates. The statute does not currently provide consequences for failure to do so, leaving open to speculation whether the legislature may ultimately determine an insurer could face continued responsibility if it does not timely notify of a coverage lapse or termination.